Goyal said Coal India’s production target of 550 million tonnes for this financial year may have to be scaled down if sales don’t pick up in tandem with output growth.ET Bureau | January 29, 2016, 07:55 IST

KOLKATA: Coal Minister Piyush Goyal may be facing a problem of plenty. The minister said Coal India’s production target of 550 million tonnes for this financial year may have to be scaled down if sales don’t pick up in tandem with output growth.

“A 9.8% coal production growth has led to a situation where Coal India cannot stock coal at its stockyards and it needs to be liquidated so that the company can attain its production target for the year,” Goyal said. “We need to look at all available options to make sure the company is able to sell coal being produced and attain its production target.”

Options to boost coal sales include reducing prices, offering more fuel through e-auctions and increasing supplies to thermal power plants currently not receiving their full quotas. However, no decision has been taken.

Coal India currently has a total stockpile of about 40 million tonnes. In addition, there are 34 million tonnes stacked at thermal power plants, taking the total volume to 74 million tonnes – more than 13% of its production target. According to a Coal India official, reducing prices may not be the immediate option – selling the additional output is the only viable solution to achieve production growth.

“We can push additional coal through e-auction – that way, power plants without dedicated coal supply contracts can receive coal from us. We have also figured that there are power companies which are receiving coal strictly on the basis of their eligibility – which is 80% of their total requirement. Coal India can sell 100% of the requirement to these companies,” he said.

Goyal ruled out handing out new coal supply contracts because they can now only be auctioned. Most thermal power plants that have supply contracts with Coal India are now flush with the fuel and cannot stock additional volumes. Added to this is the less-than-anticipated growth in demand for power and a fall in generation capacity utilisation.

Goyal said coal block auctions would resume when the market improves and it will not affect a plan for companies other than Coal India to produce 500 million tonnes of the fuel by 2020.

“To save the environment and to fight climate change, my government has planned a major campaign. By 2022, we want to generate 175 GW of renewable energy. In the last three years, we have already achieved 60 GW or around one-third of this target,” he said.